1.0Liberty Street Economicshttps://libertystreeteconomics.newyorkfed.orgblog authorhttps://libertystreeteconomics.newyorkfed.org/author/blog-author/The Indirect Costs of Lehman’s Bankruptcy - Liberty Street Economicsrich600338<blockquote class="wp-embedded-content" data-secret="fzU29hzBaa"><a href="https://libertystreeteconomics.newyorkfed.org/2019/01/the-indirect-costs-of-lehmans-bankruptcy/">The Indirect Costs of Lehman’s Bankruptcy</a></blockquote><iframe sandbox="allow-scripts" security="restricted" src="https://libertystreeteconomics.newyorkfed.org/2019/01/the-indirect-costs-of-lehmans-bankruptcy/embed/#?secret=fzU29hzBaa" width="600" height="338" title="“The Indirect Costs of Lehman’s Bankruptcy” — Liberty Street Economics" data-secret="fzU29hzBaa" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"></iframe><script>
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https://libertystreeteconomics.newyorkfed.org/wp-content/uploads/sites/2/2019/01/6a01348793456c970c022ad3cf661f200b-500wi.jpg500313In our previous post, we assessed losses to customers and clients from foregone opportunities after Lehman Brothers filed for bankruptcy in September 2008. In this post, we examine losses to Lehman and its investors in anticipation of bankruptcy. For example, if bankruptcy is expected, Lehman’s earnings may decline as customers close their accounts or certain securities (such as derivatives) to which Lehman is a counterparty may lose value. We estimate these losses by analyzing Lehman’s earnings and stock, bond, and credit default swap (CDS) prices.